THIS WEEK YOU NEED TO KNOW
THE INCREDIBLE AND THE ELECTABLE
A tectonic change in the world's political landscape is now under way. In this crisis, the reality of the economic collapse hitting full force, along with the impact of the hard-hitting campaign to expose and discredit the dirty duo of Senators Joe Lieberman and John McCain, initiated by, what is now being seen more and more, as the electable Lyndon LaRouche, is producing major political shifts in the global economic-strategic situation.
Some of the most visible of these changes are:
(1) The Bush Administration's about-face on the subject of what is called an IMF "bailout" of Brazil. It is actually a desperate effort to bail out U.S. mega-banks which have the greatest at risk in Brazil.
(2) Steps taken in Europe, in response to the catastrophic impact of the Maastricht Treaty-system, toward Franklin Roosevelt-style, government-guaranteed job-creation programs, and away from the free-market insanity of the Maastricht Treaty.
(3) The rising intensity of coordinated opposition to an Iraq war in the United States and western Europe.
(4) The discrediting of Lieberman and McCain in politically minded circles in the U.S., to the point where neither is any longer considered a viable Presidential candidate.
1. Brazil and the Bank Bailout: Since taking office, U.S. Treasury Secretary Paul O'Neill had always insisted that mega-bailouts were a thing of the past, and that this was the Bush Administration's strongly expressed position. But the implications of a cascading default by Brazil, and then by others, was too much to contemplate. U.S. banks had some $32 billion at risk in Brazil as of March 31, 2002, with CitiGroup's exposure said to be close to $13 billion of that total.
Also, European banks have some $82 billion at risk, with Spanish interests being the most exposed by far. This does not include the foreign corporate investment tied up in Brazil, with U.S. corporate assets estimated by Brazil's Central Bank to have been over $55 billion at the end of 2000.
"The danger of an imminent Brazilian defaultwith its $500 billion real foreign debt and an out-of-control domestic public debt bubblewas too big to digest," Lyndon LaRouche said in an Aug. 8 interview. "The entire system could blow out at a moment's notice."
"The Bush Administration has no idea at present of what to do about the global systemic crisis, nor the specific danger of a Brazilian debt blow-out," LaRouche added. "What they do know is that they don't want Citibank and J.P. Morgan Chase, and perhaps also others, to go under. So this IMF package is not a favor to Brazil; it is a favor to a United States that doesn't know what the hell else to do under these circumstances."
The implications of the Brazil crisis were drawn out in the lead editorial of the Aug. 8 German edition of the Financial Times, headlined "Final Nail in the Coffin for IMF Ideology,' ' That editorial by Sebastian Dullien, notes that the crisis in Ibero-America, and Brazil in particular, is completely "demolishing the theoretical foundation" of IMF policies. Brazil has had a free-floating currency since 1999. Its Central Bank fought inflation. The government carried out economic reforms. Nevertheless, the national currency, the real, "is crashing," and with every devaluation of the real, the debt burden rises and default comes closer. On the basis of such evidence, the FT editorial then drew the appropriate conclusion: "The Latin American crisis is putting into question the entire modern world monetary system." Perhaps, it suggested, this is the time "to think about a new world monetary system."
2. Job-Creation Programs: In both Germany and Italy, proposals have been put forward for the use of government guarantees, to launch Franklin Roosevelt-style, privately funded, job-creation programs, along lines long-advocated by LaRouche and his co-thinkers in Europe, especially since the Schiller Institute's late 1990s push for a Balkans reconstruction program. The simultaneous emergence of these programs, advocating the model of the Kreditanstalt für Wiedereaufbau (KfW) programs so successful in Germany's postwar reconstruction, are prominently promoted in both Italy and Germanya remarkable indication of the dramatic transformations now underway.
On Aug. 1, Italian Economy Minister Giulio Tremonti announced that Italy has decided to bypass the budget constraints of the European Stability Pact, by creating an agency which will sell state-guaranteed bonds for infrastructure development, on the model of the German Kreditanstalt für Wiederaufbau (KfW). The KfW was created to finance the industrial reconstruction and development of Germany under the postwar Marshall Plan. The new Italian agency, called Infrastruttura SpA (Ispa), will be operational starting in September. Up to this point, the Stability Pact's stringent budgetary requirements have prevented major infrastructure development.
On Aug. 5, Germany's Der Spiegel reported that the government's Hartz Commission had changed its views on the issue of economic and labor market incentives, and is now considering a three-year crash program for the creation of one million new jobs. The jobs would be created through a special new fund in the range of 150 billion euros, and are to be created mostly in the mittelstandsmall to medium-sizedfirms, and mostly in infrastructure development projects in the economically-devastated, eastern part of Germany.
The Hartz Commission is proposing that the new fund be created by having the KfW issue special bonds, called "job floaters," rather than financing the program through normal state bonds, which would increase public debt, and would thus violate the "Maastricht criteria" of the European Stability Pact.
3. Resistance to the Iraq War: The shift in Germany's economic thinking coincided with Chancellor Gerhard Schröder's assertion, over the weekend of Aug. 3-4, that Germany will not participate in an invasion of Iraq. This announcement, which has sent shockwaves around the world, reflects a broader, coordinated opposition to the planned Iraq war.
While resistance to a U.S.-led Iraq adventure has been growing in Europe for months, what seems to have triggered a crystallization of this ferment, is the open resistance among the uniformed military within the United States. Increasingly, the Joint Chiefs of Staff and other U.S. military leaders have let it be known that they regard the "On-to-Baghdad" war plans being promulgated by the Pentagon's civilian leadership (led by Deputy Secretary of Defense Paul Wolfowitz and "adviser" Richard Perle), as dangerous folly.
In Britain, where opposition to an Iraq war has been manifest for some time, the new element is the outspokenness of leading figures in the military-defense establishment, such as that of Field Marshall Lord Bramall, who was Margaret Thatcher's Chief of the Defense Staff in 1982-85, and whose views command wide respect in both the active and retired military establishment in the UK. Over the Aug. 3-4 weekend, Lord Bramall told BBC: "This is a potentially very dangerous situation, in which this country might be swept into a very, very messy and long-lasting Middle East war.... You don't have license to attack someone else's country just because you don't like the leadership." Opposition to the Iraq war drive is intensifying on both sides of the aisle, among both Blair's Labour Party, and the Conservatives.
The opposition to war in Germany, France, and Britain is also reflected in Italy. According to a leak in the daily Corriere della Sera on Aug. 8, the Italian government is in the process of bringing together several European and Arab governments for a joint initiative to solve the tensions in and around Iraq, especially over allowing United Nations weapons inspectors into the country through diplomatic, rather than military means.
In the U.S., attention should be paid to the statements by former National Security Adviser Brent Scowcroft, known to be close to the senior George Bush and his circles. Expressing again his concerns about going to war against Saddam Hussein, Scowcroft warned, "I think we could have an explosion in the Middle East. It could turn the whole region into a cauldron, and destroy the war on terror."
But the most notable shift in the United States was that of House Majority Leader Dick Armey (R-Texas), on Aug. 8. Rep. Armey, a staunch conservative and Bush ally, stated: "If we try to act against Saddam Hussein, as obnoxious as he is, without proper provocation, we will not have the support of other nation states who might do so.... I don't believe that America will justifiably make an unprovoked attack on another nation.... It would not be consistent with what we have been as a nation or what we should be as a nation."
4. Effects of LaRouche's Drive Against McCain and Lieberman: Dick Armey's comments reflected what Lyndon LaRouche said to expect, at the outset of his initiative to destroy the influence of Senators Joe Lieberman (D-Conn) and John McCain (R-Ariz). This blackmail game against President Bush, that Lieberman-linked McCain would run as a "Bull Moose" third-party candidate, thus drawing off votes from Bush, has kept Bush and his advisers constantly looking over their shoulders.) Destroy this dirty pair, LaRouche said, and beneficial ripple effects will be felt in the Republican Party as well as the Democratic Party.
In fact, LaRouche's personal initiative is transforming the situation in Washington and around the country. Over the past one-to-two weeks, there has been a striking increase in public criticism attacks on Joe Lieberman. Washington insiders have reported that LaRouche's campaign against Lieberman and McCain is the talk of the town, and that, as a result, Lieberman is now already finished as a potential Presidential candidate.
Notably, this political upheaval was also felt in the Democratic primaries in Michigan, on Aug. 6, where LaRouche Democrat Kerry Lowry won the Democratic primary in the 19th state House district with 61% of the vote; another LaRouche Democrat, Joseph Barrera, took 48% of the vote in his primary for a state Senate seat. Both of these candidates surged to his respective victory and near-victory through their mass circulation of support for LaRouche's initiative against Lieberman and McCain.
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